Innovation under Austerity

Thank you. it's a pleasure to be here, and to see so many friends.
I'm very grateful to David for the invitation, it's a privilege to be
here. I'm going to talk of mostly about a subject almost as geeky as
stuff we all talk about all the time, namely political economy. I'm
going to try and make it less snooze-worthy than it sometimes seems to
be, but you'll forgive me I'm sure for starting fairly far from
OpenSSL, and we'll get closer as time goes by.

The developed economies around the world, all of them now, are
beginning to experience a fundamentally similar and very depressing
condition. They are required to impose austerity because levels of
private debt have gummed up the works and the determination of the
owners of capital to take vast risks with other peoples money have
worked out extremely badly for the last half decade. And so austerity
is the inevitable and politically damaging position for all the
governments in the developed world, and some of those governments have
begun to slip into a death spiral, in which the need to impose
austerity and reduce public investment and welfare support for the
young is harming economic growth, which prevents the austerity from
having its desirable consequences. Instead of bad asset values being
worked off and growth resuming, we are watching as the third largest
economy in the world, the European Union, finds itself at the very
verge of a currency collapse and a lost generation, which would have a
profoundly depressing effect on the entire global economy.

For the policy-makers--I recognize that few of them are here, they
have of course, better things to do than to listen to us--for the
policy-makers in other words, an overwhelming problem is now at hand,
how do we have innovation and economic growth under austerity?

They do not know the answer to this question and it is becoming so
urgent that it is beginning to deteriorate their political control.
Marginal parties in several very highly developed and thoughtful
societies are beginning to attract substantial numbers of votes, and
threatening the very stability of the economic planners' capacity to
solve, or to attempt to solve, the problem of innovation under
austerity.

This is not good news for anybody. This is not good for anybody.
We have no opportunity to cheer for this outcome, which is largely the
result of incompetence in those people who claim to be worth all that
money because they're so smart, it is partly the result of the
political cowardice that gave them too much room to swing their
cats. It is not that we are glad to see this happen, but there is a
silver lining to the cloud. There are very few people who know how to
have innovation under austerity. We are they.

We have produced innovation under austerity for the last generation
and not only did we produce pretty good innovation we've produced
innovation that all the other smart rich people took most of the
credit for. Most of the growth that occurred during this wild and
wacky period in which they took other people's money and went to the
racetrack with it, was with innovation we produced for them. So now,
despite the really bad circumstances which we too can deplore, because
the unemployment is my graduating law students, your children, and all
those other young people whose lives are being harmed for good by
current bad economic circumstances. The people beginning their
careers now will suffer substantial wage losses throughout their
lifetimes. Their children will get a less good start in life because
of what is happening now, we cannot be pleased about this.

But we have a very substantial political opportunity. Because we
do have the answer to the most important question pushing all the
policy-makers in the developed world right now. That means we have
something very important to say and I came here this morning primarily
to begin the discussion about precisely how we should say it.

And I want to present a working first draft of our argument, I say
"our" because I look around the room and I see it's us here this
morning. Our argument, about what to do with the quandary the world is
in. Innovation under austerity is not produced by collecting lots of
money and paying it to innovation intermediaries. One of the most
important aspects of 21st century political economy is that the
process we call disintermediation, when we're begin jargony about it,
is ruthless, consistent, and relentless. Television is melting. I
don't need to tell you that, you know already. Nobody will ever try
to create a commercial encyclopedia again. Amazon's lousy little
I-will-let-you-read-some-books-unless-I-decide-to-take-them-back
machine is transforming publishing by eliminating the selective power
of the book publishers, much as Mr. Jobs almost destroyed the entire
global music industry under the pretense of saving it. A task his
ghost is already performing for the magazine publishers as you can
see.

Disintermediation, the movement of power out of the middle of the
net, is a crucial fact about 21st century political economy. It
proves itself all the time. Somebody's going to win a Nobel Prize in
economics for describing in formal terms the nature of
disintermediation. The intermediaries who did well during the past 10
years, are limited to two sets: health insurers in the United States
owing to political pathology, and the financial industry.

Health insurers in the United States may be able to capitalize on
the continuing political pathology to remain failing and expensive
intermediaries for a while longer. But the financial industry crapped
in it's own nest and is shrinking now and will continue for some time
to do so. The consequence of which is that throughout the economic
system, as the policy-maker observes it, the reality that
disintermediation happens and you can't stop it becomes a guiding
light in the formation of national industrial policy. So we need to
say it's true about innovation also.

The greatest technological innovation of the late 20th century is
the thing we now call the World Wide Web. An invention less than 8000
days old. That invention is already transforming human society more
rapidly than anything since the adoption of writing. We will see more
of it. The nature of that process, that innovation, both fuels
disintermediation, by allowing all sorts of human contacts to occur
without intermediaries, buyers, sellers, agents, and controllers. And
poses a platform in which a war over the depth and power of social
control goes on, a subject I'll come back to in a few minutes. For
now what I want to call attention to is the crucial fact that the
World Wide Web is itself a result of disintermediated innovation.

What Tim first did at CERN was not the Web as we know it now, the
Web as we know it now was made by the disintermediated innovation of
an enormous number of individual people. I look back on what I wrote
about the future of personal homepages in 1995, and I see pretty much
what I thought then would happen happening, I said then those few
personal homepages are grass seed and a prairie is going to grow, and
so it did.

Of course, like all other innovation there were unintended
consequences. The browser made the Web very easy to read. Though we
built Apache, though we built the browsers, though we built enormous
numbers of things on top of Apache and the browsers, we did not make
the Web easy to write. So a little thug in a hooded sweatshirt made
the Web easy to write, and created a man in the middle attack on human
civilization, which is unrolling now to an enormous music of social
harm. But that's the intermediary innovation that we should be
concerned about. We made everything possible including, regrettably,
PHP, and then intermediaries for innovation turned it into the horror
that is Facebook. This will not turn out, as we can already see from
the stock market result, to be a particularly favourable form of
social innovation. It's going to enrich a few people. The government
of Abu Dhabi, a Russian thug with a billion dollars already, a guy who
can't wait to change his citizenship so he doesn't have to pay taxes
to support the public schools, and a few other relics of 20th century
misbehavior.

But the reality of the story underneath is, if we'd had a little
bit more disintermediated innovation, if we had made running your own
web-server very easy, if we had explained to people from the very
beginning how important the logs are, and why you shouldn't let other
people keep them for you, we would be in a rather different state
right now. The next Facebook should never happen. It's intermediated
innovation serving the needs of financiers, not serving the needs of
people. Which is not say that social networking shouldn't happen, it
shouldn't happen with a man in the middle attack built into it.
Everybody in this room knows that, the question is how do we teach
everybody else.

But as important as I consider everybody else to be right now, I
want to talk about the policy-makers: how do we explain to them? And
here we begin to divide the conversation into two important parts.
One, what do we know about how to achieve innovation under austerity?
Two, what prevents governments from agreeing with us about that?

So let me present first my first draft of the positive case for
innovation under austerity, it's called "We Made The Cloud".

Everybody understands this in this room too. The very point about
what's happening to information technology in the world right now, has
to do with scaling up our late 20th century work. We created the idea
that we could share operating systems and all the rest of the
commoditizable stack on top of them. We did this using the curiosity
of young people. That was the fuel, not venture capital. We had been
at it for 15 years, and our stuff was already running everywhere,
before venture capital or even industrial capital raised by IT giants
came towards us. It came towards us not because innovation needed to
happen, but because innovation had already happened, and they needed
to monetize it. That was an extremely positive outcome, I have
nothing bad to say about that. But the nature of that outcome, indeed
the history as we lived it and as other can now study it, will show
how innovation under austerity occurred. It's all very well to say
that it happened because we harnessed the curiosity of young people,
that's historically correct. But there's more than that to say.

What we need to say is that that curiosity of young people could be
harnessed because all of the computing devices in ordinary day to day
use were hackable. And so young people could actually hack on what
everybody used. That made it possible for innovation to occur, where
it can occur, without friction, which is at the bottom of the pyramid
of capital. This is happening now elsewhere in the world as it
happened in the United States in the 1980s. Hundreds of thousands of
young people around the world hacking on laptops. Hacking on
servers. Hacking on general purpose hardware available to allow them
to scratch their individual itches, technical, social, career, and
just plain ludic itches. "I wanna do this it would be neat."
Which is the primary source of the innovation which drove all of the
world's great economic expansion in the last 10 years. All of
it. Trillions of dollars of electronic commerce. Those of you old
enough to remember when fighting Public Key Encry ption tooth and
nail, was the United States government's policy will remember how hard
they fought, to prohibit 3.8 trillion dollars worth of electronic
commerce from coming into existence in the world.

We were supposedly proponents of nuclear terrorism and pedophilia
in the early 1990s, and all the money that they earned in campaign
donations and private equity profits and all the rest of it, is owing
to the globalization of commerce we made possible, with the technology
they wanted to send our clients to jail for making. That demonstrates
neatly I think, to the next generation of policy-makers how thoroughly
their adherence to the received wisdom is likely to contribute to the
death spiral they now fear they're going to get into. And it should
embolden us to point out once again that the way innovation really
happens is that you provide young people with opportunities to create
on an infrastructure which allows them to hack the real world, and
share the results.

When Richard Stallman wrote the call at the university in Suffolk
for the universal encyclopedia, when he and Jimmy Wales and I were all
much younger than we are now, it was considered a frivolous idea. It has now
transformed the life of every literate person in the world. And it
will continue to do so.

The nature of the innovation established by Creative Commons, by
the Free Software Movement, by Free Culture, which is reflected in the
Web in the Wikipedia, in all the Free Software operating systems now
running everything, even the insides of all those locked-down vampiric
Apple things I see around the room. All of that innovation comes from
the simple process of letting the kids play and getting out of the
way. Which, you are aware, we are working as hard as we can to
prevent now completely. Increasingly, all around the world the actual
computing artifacts of daily life for human individual beings are
being made so you can't hack them. The computer science laboratory in
every twelve year old's pocket is being locked-down.

When we went through the anti-lockdown phase of the GPL 3
negotiations in the middle of last decade, it was somehow believed
that the primary purpose for which Mr. Stallman and I were engaged in
pressing everybody against lock-down had something to do with
bootlegging movies. And we kept saying, this is not the Free Movie
Foundation. We don't care about that. We care about protecting
people's right to hack what they own. And the reason we care about it
is, that if you prevent people from hacking on what they own
themselves, you will destroy the engine of innovation from which
everybody is profiting.

That's still true. And it is more important now precisely because
very few people thought we were right then, and didn't exert
themselves to support that point of view, and now you have Microsoft
saying we won't allow third-party browsers on ARM-based Windows RT
devices. And you have the ghost of Mr. Jobs trying to figure out how
to prevent even a free tool chain from existing in relation to IOS,
and you have a world in which increasingly the goal of the network
operators is to attach every young human being to a proprietary
network platform with closed terminal equipment that she can't learn
from, can't study, can't understand, can't whet her teeth on, can't do
anything with except send text messages that cost a million times more
than they ought to.

And most of the so-called innovation in the world, in our sector,
now goes into creating IT for network operators that improves no
technology for users. Telecomms innovation in the world has basically
ceased. And it will not revive so long as it is impossible to harness
the forms of innovation that really work under austerity.

This has a second-order consequence of enormous importance.
Innovation under austerity occurs in the first-order because the
curiosity of young people is harnessed to the improvement of the
actual circumstances of daily life. The second-order consequence is
that the population becomes more educated.

Disintermediation is beginning to come to higher education in the
United States, which means it is beginning to come to higher education
around the world. We currently have two models. Coursera, is
essentially the googlization of higher education, spun-off from
Stanford as a for-profit entity, using closed software and proprietary
educational resources. MITx, which has now edX through the formation
of the coalition with Harvard University, is essentially the free
world answer. Similar online scalable curriculum for higher education
delivered over Free Software using free education resources. We have
an enormous stake in the outcome of that competition. And it behooves
all of us to put as much of our energy as we can behind the solutions
which depend upon free courseware everybody can use, modify and
redistribute, and educational materials based on the same political
economy.

Every society currently trying to reclaim innovation for the
purpose of restarting economic growth under conditions of austerity
needs more education, deliverable more widely at lower cost, which
shapes young minds more effectively to create new value in their
societies. This will not be accomplished without precisely the forms
of social learning we pioneered. We said from the beginning that Free
Software is the world's most advanced technical educational system.
It allows anybody anywhere on earth, to get to the state of art in
anything computers can be made to do, by reading what is fully
available and by experimenting with it, and sharing the consequences
freely. True computer science. Experimentation, hypothesis
formation, more experimentation, more knowledge for the human
race.

We needed to expand that into other areas of culture, and great
heroes like Jimmy Wales and Larry Lessig laid out infrastructure for
that to occur, we now need to get governments to understand how to
push it further.

The Information Society Directorate of the European Commission
issued a report 18 months ago, in which they said that they could scan
1/6th of all the books in European libraries for the cost of 100 km of
roadway. That meant, and it is still true, that for the cost of 600
km of road, in an economy that builds thousands of kilometers of
roadway every year, every book in all European libraries could be
available to the entire human race, it should be done. [shout of
"Copyright" from audience] Remember that most of those books are
in the public domain, before you shout copyright at me. Remember that
the bulk of what constitutes human learning was not made recently,
before you shout the copyright at me. We should move to a world in
which all knowledge previously available before this lifetime is
universally available. If we don't, we will stunt the innovation
which permits further growth. That's a social requirement. The
copyright bargain is not immutable. It is merely convenient. We do
not have to commit suicide culturally or intellectually in order to
maintain a bargain which does not even relevantly apply to almost all
of important human knowledge in most fields. Plato is not owned by
anybody.

So here we are, asking ourselves what the educational systems of
the 21st century will be like, and how they will socially distribute
knowledge across the human race. I have a question for you. How many
of the Einsteins who ever lived were allowed to learn physics? A
couple. How many of the Shakespeares who ever lived, lived and died
without learning to read and write? Almost all of them. With 7
billion people in the world right now, 3 billion of them are children;
how many Einsteins do you want to throw away today? The
universalization of access to education, to knowledge, is the
single-most important force available for increasing innovation and
human welfare on the planet. Nobody should be afraid to advocate for
it because somebody might shout "copyright".

So we are now looking at the second-order consequence of an
understanding of how to conduct innovation under austerity. Expand
access to the materials that create the ability to learn, adapt
technology to permit the scientists below age 20 to conduct their
experiments and share their results, permit the continuing growth of
the information technology universe we created, by sharing, over the
last quarter century, and we'd begin to experience something like the
higher rates of innovation available, despite massive decreases in
social investment occurring because of austerity.

We also afford young people an opportunity to take their economic
and professional destinies more into their own hands, an absolute
requirement if we are to have social and political stability in the
next generation. Nobody should be fooled about the prospects for
social growth in societies where 50 percent of the people under 30 are
unemployed. This is not going to be resolved by giving them assembly
line car-building jobs. Everybody sees that. Governments are
collectively throwing up their hands about what to do about the
situation. Hence, the rapidity with which, in systems of proportional
representation, young people are giving up on established political
parties. When the Pirates can take 8.3% of the vote in
Schleswig-Holstein, it is already clear that young people realize that
established political policy-making is not going to be directed at
their future economic welfare. And we need to listen, democratically,
to the large number of young people around the world who insist that
internet freedom and an end to snooping and control is necessary to
their welfare and ability to create and live.

Disintermediation means there will be more service providers
throughout the economy with whom we are directly in touch. That means
more jobs outside hierarchies and fewer jobs inside hierarchies. Young
people around the world whether they are my law students about to get
a law license, or computer engineers about to begin their practices,
or artists, or musicians, or photographers, need more freedom in the
net, and more tools with which to create innovative service delivery
platforms for themselves. A challenge to which their elders would not
have risen successfully in 1955, but we are new generation of human
beings working under new circumstances, and those rules have
changed. They know the rules have changed. The indignados in
every square in Spain know the rules have changed. It's their
governments that don't know.

Which brings us I will admit to back to this question of anonymity,
or rather, personal autonomy. One of the really problematic elements
in teaching young people, at least the young people I teach, about
privacy, is that we use the word privacy to mean several quite
distinct things. Privacy means secrecy, sometimes. That is to say,
the content of a message is obscured to all but it's maker and
intended recipient. Privacy means anonymity, sometimes, that means
messages are not obscured, but the points generating and receiving
those messages are obscured. And there is a third aspect of privacy
which in my classroom I call autonomy. It is the opportunity to live
a life in which the decisions that you make are unaffected by others'
access to secret or anonymous communication.

There is a reason that cities have always been engines of economic
growth. It isn't because bankers live there. Bankers live there
because cities are engines of economic growth. The reason cities have
been engines of economic growth since Sumer, is that young people move
to them, to make new ways of being. Taking advantage of the fact that
the city is where you escape the surveillance of the village, and the
social control of the farm. "How you gonna keep them down on the
farm after they've seen Paris?" was a fair question in 1919 and
it had a lot do with the way the 20th century worked in the United
States. The city is the historical system for the production of
anonymity and the ability to experiment autonomously in ways of
living. We are closing it.

Some years ago, to wit, at the beginning of 1995 we were having a
debate at the Harvard Law School about Public Key Encryption. Two on
two. On one side Jamie Gorelick, then the Deputy Attorney General of
the United States, and Stewart Baker, then as now at Steptoe & Johnson
when he isn't in the United States government making horrendous social
policy. On the other side, Danny Weitzner, now in the White House,
and me. And we spent the afternoon talking back and forth about
whether we should have to escrow our keys with the United States
government, whether the clipper chip was going to work and many other
very interesting subjects now as obsolete as Babylonia. And after it
was all over, we walked across the Harvard campus for dinner at the
Harvard Faculty Club and on the way across the campus Jamie Gorelick
said to me "Eben, on the basis of nothing more than your public
statements this afternoon I have enough to order the interception of
your telephone conversations." In 1995 that was a joke. It was a
joke in bad taste when told to a citizen by an official of the United
States Justice Department. But it was a joke. And we all laughed
because everybody knew you couldn't do that.

So we ate our dinner, and the table got cleared and all the plates
went away, and the port and walnuts got scattered around, and Stewart
Baker looked up and said "alright, we'll let our hair down",
and he had none then and he has none now, but "we'll let our hair
down" Stewart said, "we're not going to prosecute your
client Mr Zimmerman. We've spent decades in a holding action against
Public Key Encryption it's worked pretty well but it's almost over
now, we're gonna let it happen." And then he looked around the
table and he said, "but nobody here cares about anonymity do
they?" A cold chill went up my spine.

And I thought, "OK, Stewart, I understand how it is. You're
going to let there be Public Key Encryption because the bankers are
going to need it. And you're going to spend the next 20 years trying to stop
people from being anonymous ever again, and I'm going to spend those
20 years trying to stop you." So far I must say from my friend
Mr. Baker has been doing better than I had hoped, and I have been
doing even worse than I had feared. Partly because of the thug in a
hoodie, and partly for other reasons. We are on the verge of the
elimination of the human right to be alone. We are on the verge of
the elimination of the human right to do your own thinking, in your
own place, in your own way without anybody knowing. Somebody in this
room just proved a couple of minutes ago that if he shops at a
particular web-store using one browser, he gets a different price than
on the other. Because one of the browsers is linked to his browsing
history. Prices, offers, commodities, opportunities, are now being
based upon the data mining of everything. A senior government
official in this government said to me after the United States changed
its rules about how long they keep information on everybody about whom
nothing is suspected - you all do know about that right? Rainy
Wednesday on the 21st of March, long after the close of business,
Department of Justice and the DNI, that's the Director of National
Intelligence, put out a joint press release announcing minor changes
in the Ashcroft rules, including a minor change that says that all
personally identifiable information in government databases at the
National Center for Counter-Terrorism that are based around people of
whom nothing is suspected, will no longer be retained as under the
Ashcroft rules for a maximum of 180 days, the maximum has now been
changed to 5 years. Which is infinity.

I told my students in my classroom, the only reason they said 5
years was they couldn't get the sideways eight into the font for the
press release, so they used an approximation. So I was talking to a
senior government official of this government about that outcome and
he said well you know we've come to realize that we need a robust
social graph of the United States. That's how we're going to connect
new information to old information. I said let's just talk about the
constitutional implications of this for a moment. You're talking about
taking us from the society we have always known, which we quaintly
refer to as a free society, to a society in which the United States
government keeps a list of everybody every American knows. So if
you're going to take us from what we used to call a free society to a
society in which the US government keeps a list of everybody every
American knows, what should be the constitutional procedure for doing
this? Should we have, for example, a law? He just laughed. Because of
course they didn't need a law. They did it with a press release on a
rainy Wednesday night after everybody went home, and you live there
now.

Whether it is possible to have innovation under conditions of
complete despotism is an interesting question. Right-wing Americans
or maybe even center-right Americans, have long insisted that one of
the problems with 20th century totalitarianism, from which they
legitimately distinguish themselves, was that it eliminated the
possibility of what they call free markets and innovation. We're
about to test whether they were right.

The network, as it stands now, is an extraordinary platform for
enhanced social control. Very rapidly, and with no apparent remorse,
the two largest governments on earth, that of the United States of
America and the People's Republic of China have adopted essentially
identical points of view. A robust social graph connecting government
to everybody and the exhaustive data mining of society is both
governments fundamental policy with respect to their different forms
of what they both refer to, or think of, as stability maintenance. It
is true of course that they have different theories of how to maintain
stability for whom and why, but the technology of stability
maintenance is becoming essentially identical.

We need, we, who understand what is happening, need, to be very
vocal about that. But it isn't just our civil liberties that are at
stake, I shouldn't need to say that, that should be enough, but of
course it isn't. We need to make clear that the other part of what
that costs us is the very vitality and vibrancy of invention culture
and discourse, that wide open robust and uninhibited public debate
that the Supreme Court so loved in New York Times against Sullivan.
And that freedom to tinker, to invent, to be different, to be
non-conformist for which people have always moved to the cities that
gave them anonymity, and a chance to experiment with who they are, and
why they can do.

This more than anything else, is what sustains social vitality and
economic growth in the 21st century. Of course we need anonymity for
other reasons. Of course we are persuing something that might be
appropriately described as protection for the integrity of the human
soul. But that's not government's concern. It is precisely the glory
of the way we understand civil society that that is not government's
concern. It is precisely our commitment to the idea of the
individual's development at her own pace, and in her own way, that has
been the centerpiece of what we understood to be our society's
fundamental commitment that means that the protection for the
integrity of the human soul is our business, not the government's
business. But government must attend to the material welfare of its
citizens and it must attend to the long run good of the society they
manage. And we must be clear to government that there is no tension
between the maintenance of civil liberty in the form of the right to
be let alone, there is no distinction between the civil liberty policy
of assuring the right to be let alone, and the economic policy of
securing innovation under austerity. They require the same
thing.

We need Free Software, we need Free Hardware we can hack on, we
need Free Spectrum we can use to communicate with one another, without
let or hindrance. We need to be able to educate and provide access to
educational material to everyone on earth without regard to the
ability to pay. We need to provide a pathway to an independent
economic and intellectual life, for every young person. The
technology we need, we have, I have spent some time and many people in
this room, including Isaac have spent more time now, trying to make
use of cheap, power efficient compact server computers, the size of AC
chargers for mobile phones, which with the right software we can use
to populate the net with robots that respect privacy. Instead of the
robots that disrespect privacy which we now carry in almost every
pocket.

We need to retrofit the first law of robotics into this society
within the next few minutes or we're cooked. We can do that. That's
civil innovation. We can help to continue the long lifetime of
general purpose computers everybody can hack on. By using them, by
needing them, by spreading them around. We can use our own force as
consumers and technologists to deprecate closed networks and
locked-down objects, but without clear guidance in public policy we
will remain a tiny minority, 8.3% let's say. Which will not be
sufficient to lift us out of the slough into which the bankers have
driven us.

Innovation under austerity is our battle-cry. Not a battle-cry for
the things we most care about, but the ones the other people most care
about. Our entree to social policy for the next five years, and our
last chance to do in government what we have not been able to do by
attempting to preserve our mere liberties. Which have been shamefully
abused by our friends in government as well as by our adversaries. We
have been taken to the cleaners with respect to our rights, and we
have been taken to the cleaners with respect to everybody's money.

I wish that I could say that the easiest thing to do was going to
be to get our freedoms back, it isn't. Nobody will run in the
election this year on the basis of the restoration of our civil
liberties. But they will all talk about austerity and growth. And we
must bring our message where they are.

That's my first draft. Inadequate in every way, but at least a
place to start. And if we have no place to start, we will lose. And
our loss will be long. And the night will be very dark.